Apprenticeship Funding

What is The Apprenticeship Levy?

Funding rules are in place and require employers to either pay into a Levy pot or pay a contribution towards training and assessments. The Apprenticeship Levy, introduced by the government in April 2017, puts employers ‘in the driving seat’ in terms of designing Apprenticeships in England.

The Apprenticeship Levy requires larger employers to pay into a Levy pot:

Employers with a UK paybill in excess of £3 million p.a. will pay monthly declarations into an Apprenticeship Levy account at a rate of 0.5% of their annual wage bill.

Employers with a UK pay bill of less than £3 million p.a. are not required to pay into an Apprenticeship Levy account. They could be required to contribute up to 5% towards the cost of Apprenticeship training and assessment, with the government funding 95% of the agreed price.

How much do I pay for an apprenticeship?

There are different rules and guidelines in place. These take into consideration things like the size of your business, the industry and the level of the apprenticeship. To get a specific number for a specific apprenticeship, get in touch with the team and we’ll run through the specifics. 

If you’re Levy-Paying:

Then you pay:

  • the cost of the apprenticeship from your apprenticeship service account.

  • 5% of any fees your account doesn’t cover.

  • Any fees over the funding band maximum.

…and the government pays:

  • 95% of any fees your apprenticeship service account funds don’t cover, up to the funding band maximum.

Non-levy-paying:

Then you pay:

  • 0% for 16-21 year olds, or for 22-24 year olds who have been in care or have an education, health and care plan.

  • 5% for other apprentices.

  • Any fees over the funding band maximum.

…and the government pays:

  • 100% for 16-21 year olds, or for 22-24 year olds who have been in care or have an education, health and care plan.

  • 95% for other apprentices, up to the funding band maximum.

Additional Apprenticeship Funding

The government offers a £1,000 incentive payment to both you and your training provider for each apprentice you train who is:

  • 16-18 years old.

  • 19-24 years old, and has been in care or has an education, health and care plan.

You don’t pay National Insurance contributions for apprentices under the age of 25 on earnings below the higher tax rate of £827 a week (£43,000 a year).

For more information, please reach out to the team.

Upcoming National Insurance Changes - Effective April 2025:

You don’t pay National Insurance contributions for apprentices under the age of 25, however;

  • Lowered NI Threshold: Employers will begin paying NI on employee earnings over £5,000 (previously £9,100).

  • Increased Contribution Rate: The employer contribution rate will increase from 13.8% to 15% on all earnings above £5,000.

Therefore if your business employs apprentices under the age of 25, you’re exempt from paying National Insurance contributions on their earnings, which is a substantial benefit and a notable saving for companies bringing in younger talent through apprenticeships.

Talk to our team today

Ask our team a question about our courses, how to get started or anything else to do with The Colleges Partnership here, we will get back to you as soon as possible.